In a move that smacks of desperation, the government of Javier Milei and Minister Luis Caputo promptly transferred the $3.2 billion that banks BBVA, Santander, and Deutsche released this Wednesday. The goal? To ensure that payment to external bondholders does not expose a brutal drop in the Central Bank’s international reserves, which nonetheless remained below $49 billion after having touched the highest peak since 2019.
The total payment of debt services amounts to around $4.2 billion, including capital maturities of about $2.6 billion and interest of another $1.6 billion on Global bonds (GD, under foreign law) and Bonares (AL, under local law).
The economic team’s strategy prioritized minimizing the impact on international reserves, so the credits they took from commercial banks backed by the World Bank and the Inter-American Development Bank were transferred directly to the accounts of the Bank of New York Mellon.
This Wednesday, funds were transferred to the Bank of New York Mellon, the international financial agent, for payment of the Global bonds. Payment is expected to be completed on Monday with transfers to Caja de Valores so that it credits the funds to the accounts of Bonares holders.
The financial program presented this week by Caputo included as financing sources credits for $4 billion backed by the WB and IDB, so it still has capacity to obtain another credit line for the remaining $800 million.
The government published this Wednesday in the Official Gazette the resolutions and contracts signed to back a $2 billion credit line from BBVA and Santander with a World Bank guarantee, and a $1.2 billion line from Deutsche Bank with an IDB guarantee.
These credit lines are for six years, with a three-year grace period and six semi-annual capital payments, with monthly interest payments at the Sofr rate (currently around 3.6%) plus 0.5% on the balance.
The rate of the operation cannot be taken as a reference for what the country would obtain in a voluntary return to international markets, which according to Country Risk remains above 400 points and shows strong resistance to breaking that floor despite all the signals Milei and Caputo send to the market about the country’s payment capacity.
In addition to announcing a financial program, whose effect on markets faded one day after the announcement, President Milei promised to reform the BCRA Charter, the financial entities law, the capital market, and insurance with ideas that are not entirely shared by the main financial players, who fear a central bank with less regulatory power and the consequences of liberalizing the other markets.
Caputo, meanwhile, announced this Wednesday that this month the Managing Director of the International Monetary Fund, Kristalina Georgieva, will arrive in the country, «invited by President Milei» in the «context of the excellent relationship and constructive dialogue of this government with the institution within the framework of the successful ongoing economic program.»
Caputo stressed that the visit «will allow us to continue deepening joint work and IMF support to consolidate the progress achieved in terms of stability and economic growth.»
All of Milei and Caputo’s effort is focused on breaking the floor of country risk to allow a placement in international markets, one of the requirements of the IMF led by Georgieva, to advance in the restructuring of maturities next year, which according to the financial program presented still does not have the total resources guaranteed.
para mí esto es un choreo de los libercholos gardelianos, hipotecan el país pa’ pagarle a los buitres y ni un mango pa’ los laburantes. yo creo que estos macacos se van a tener que hacer cargo del desastre, basuras.
Para mí esto es un golazo de Milei y Caputo, usaron los créditos de los bancos para pagarles a los bonistas y salvar las reservas. Los zurdos lloran porque no entienden nada, viven en la ignorancia. Viva la libertad carajo, que se jodan los que critican.